Brazil's Path to Hardware Manufacturing at Home

SAO PAULO — Brazil's policies on imported goods are hurting the country's economy. But engineers can do something about it.

That was the message delivered by Jon "Maddog" Hall, president of Linux International, in his keynote at the opening day of the Embedded Systems Conference in Sao Paulo.

At ESC Brazil, keynoter John Hall, president of the Linux Foundation, lays out a scenario for how a clone of the Raspberry Pi, only better and much cheaper, could be made in Brazil. Call it the Plum Pi.

"There are many reasons that more companies don't design and manufacture products here in Brazil," Hall said. "They don't trust the market size, and they are concerned about the cost of a manufacturing startup." It comes down to "cost, time, and uncertainty."

Instead, companies have their designs manufactured in places like Taiwan, and that strategy has a major drawback: When the product comes to Brazil, it's hit with a 100% import tax, which is passed on to the consumer. "This is a big mistake and a bad thing for the Brazilian economy."

Hall cited the Raspberry Pi, which has sold more than 3 million units, as a case in point. "The Raspberry Pi has a $35 retail value in the US. Add on $10 for shipping and 100% import taxes, and that same board costs around $90 in Brazil. Given the lower GDP here in Brazil, that means that most consumers are paying about 4X more for the Pi, which is a crime against God and Al Gore."

He then laid out a scenario for how a clone of the Raspberry Pi, only better, could be made in Brazil. Call it the Plum Pi.

"A company could start by taking an already proven design and using open components from a popular architecture like ARM," he said. "Add on an FPGA, WiFi, USB 3.4, and you have a robust platform for students to learn to program something other than a single-core processor."

To overcome skepticism about the market opportunity in Brazil, Hall suggested incorporating new components for developers to use and test and generating 10,000 boards to sell to a test market. The kicker would be to license the board and components freely to companies that wish to manufacture it in Brazil. The Raspberry Pi Foundation does not do that currently.

Under this scenario, Hall said, if the BOM for the new board less than $28 and were sourced from the developer, the cost would be $28 + $5 shipping (amortized over 10K boads) + 6% duty for a total cost of approximately $40 for each board produced in Brazil. That's less than half the current cost of a Raspberry Pi there.

Building this kind of hardware manufacturing capability in Brazil would address the chicken-and-egg challenge that countries often face, he said. By generating more challenging jobs, young people will stay, and then industry will come, because they feel like there is a trained, knowledgeable pool of talent to help make them successful. Industry will not come if they don't see a trained, knowledgeable pool of talent to make their industry successful.

— Karen Field is the editor in chief of EE Times and content director for EE Live and the Embedded Systems Conference.

Max wrote: [MadDog] also said that he had been talking with folks like Raspberry Pi and BeagleBone along these lines with no success...

I'm not surprised about Raspberry Pi, but BeagleBone is open-source hardware and anyone should be able to clone it. I believe that to use the BeagleBone name there are some additional requirements. Here's an example of a BeagleBone Black clone:

Addendum: Also, the BeagleBone Tech Refs are licensed under Create Commons BY-SA, so anyone is free to translate them into another language provided they keep the BY-SA license so others will be able to do the same.

@Max...QED. If Brazil can develop its own home grown solution, good luck to them. If R-Pi and Beagle refuse to think outside the box, they mustn't whinge about protectionism. VW did ok there, so there is no excuse.

There are obviously some caveats - a lot of companies that exported technology to China just had their technology hijacked. But Brazil is a different kettle of fish. It's not as big and would be much more hurt if they did not stick to an agreement about royalties etc.

@david: ...but if it could be licenced for production in Brazil, with enough royalites to let R-Pi do some quality control and make a bit of money on it, what's wrong with that?

I don't think there's anything wrong with that -- but I was there for MadDog's presentation and he also said that he had been talking with folks like Raspberry Pi and BeagleBone along these lines with no success...

A lot of posters are knocking Brazil for its stance here. But what about the west? Why could they not licence local production of the R-Pi? Look at the VW Beetle, and other vehicles - millions were produced in Brazil very successfully. Wikipedia tells me "The Volkswagen assembly plant in Brazil was established after the Brazilian government prohibited the import of fully built-up vehicles in 1953". Some 20 million vehicles have been produced, many adapted to Brazilian conditions.

Whether the R-Pi could be considered an input or a finished product is a question, but if it could be licenced for production in Brazil, with enough royalties to let R-Pi do some quality control and make a bit of money on it, what's wrong with that? R-Pi would still do OK, and Brazil would develop expertise and jobs and boost their economy. Win-Win.

So many "Free Trade Agreements" end up being very one-sided and only benefiting one of the "partners". The other one just ends up exporting jobs and part of their economy. Australia is doing some very silly things that way at the moment. "We'll let your stuff in free, and you'll reduce your tariffs on our stuff from 90% to 25%? OK....." That's just stupid.

"The developed countries do not want the developing nations to come to their level and that is why such attempts by developing nations are not liked by them ... the developing nations would exercise their right to get free from the economic shackles."

Such attitudes certainly feed into the "trade war" mentality that leads to countries shooting themselves in the feet in the name of protecting local industries. Unfortunately the effects on a country's overall economy (and specifically its consumers, who bear the brunt of such policies) are rarely considered - or are ignored - as they are not so immediately visible.

"I do not think that these are bad economic policies. In the long term they spell economic freedom."

By this same logic every country (and city and state etc.) should ban imports in order to force local economies to develop and produce their own products and technologies in the name of "self independence" and the promise of some unspecified future "economic freedom." The equivalent policies taken down to the individual level would be a recipe for returning to the Stone Age.

I do not think that these are bad economic policies. In the long term they spell economic freedom. Countries like India have shown that there is no dearth of local talent and with government support in terms of policies and the financial assistance each country can become self independent in technology.

Rcenetly India's prime minister has announce policy to promote local manufacturing of defence equipmement for which currently thousands of millions of dollars are spent on importing such equipment from the developing countries.

Most developed countries have tried to cash in on the already developed technologies to rake in huge profits from the developing countries

"In my opinion such restrictions are good for developing economies. They promote innovation, use of local talent and local resources."

They sound more like bad economic policies that promote inefficiency and lower quality/quantity of goods. Reinventing the wheel (or making it yourself) when you could produce or buy it for less elsewhere does not sound like innovation or an optimal use of local resources.